Balance Cost and Time in Your Household

Physician's Money Digest, August15 2003, Volume 10, Issue 15

For many modern families, life isincredibly busy. Often, there are 2working parents and such essentials asmaking dinner, cleaning house, anddoing laundry to schedule around anendless list of ballet classes, soccergames, and parent-teacher meetings.Factor in 1 or both parents as physiciansand a typically busy day can becomedownright chaotic.

Luckily, there's a service for just aboutany household chore. Take-out food, daycare, cleaning services, dog walkers,accountants, landscapers, house painters,personal shoppers, party planners, andthe like can all make life much easier—ifyou're willing to pay the price. These timevs cost decision-making processes thateach family faces are known in academiccircles as "household production."

"We have a choice of how to dothings—to use more money and lesstime, or more time and less money. Everyfamily faces this choice either consciouslyor subconsciously," says Dr. Daniel S.Hamermesh, a professor of economics atthe University of Texas at Austin. As 1 ofthe current researchers on the topic, hehas authored such papers as "TakingHousehold Production Seriously" and"Stressed Out on Four Continents: TimeCrunch or Yuppie Kvetch?"

Household production is becoming amore popular topic of research, Dr.Hamermesh says, "mainly because thereare now more data that allow us tostudy the issues." In fact, the US Bureauof Labor Statistics is reportedly studyinghousehold production for the first time,with a monthly survey that began thispast January.

KNOW HIRED HAND FEES

Wall Street Journal

Recently, the looked into the topic, and with the aidof an economist and some real-life costcomparisons, came up with some interestingstatistics. Based on its tests, hereare the annual salaries at which it makessense to hire a service:

  • Mowing the lawn $44,000
  • Organizing a messy desk $570,000
  • Paying the bills $196,000

Journal

Journal

Of course, not all cost vs time comparisonsinvolve hiring someone to do thetask for you. Sometimes it can mean makinga different sort of investment in technologyor convenience. Along these lines,the compared buying a tax softwareprogram to using a walk-in tax preparer.With the preparer costing $179more, the newspaper found you wouldneed to make about $14 million a year tojustify the cost of hiring someone. Whatabout convenience? When the writers compared the cost of buying a jarof chopped garlic to the 22 minutes it tookthem to chop it themselves, they determinedthat anyone making over $10,000 ayear can justify buying a prechopped jar.

Journal

Obviously, there's more to the time vscost decision than simply crunching numbers.Factors such as level of enjoyment ordislike of the task also come into play—which the says represents a differentway of looking at the study of householdproduction than in the past.

FIGURE IT OUT

Journal

Journal

The following equation, developed bythe , should provide some guidancefor your physician-family decisions.First, determine your hourly take-homepay. Then determine the cost of hiringsomeone (including your time to hire andmanage them). Now, compare hiringsomeone to this number: (the cost ofmaterials + the time you would save byhiring someone) x your hourly pay. Onceyou know the financial scenario, considerthe emotional aspects. The 's equationrates your enjoyment, skill level, indirectbenefits (eg, exercise and self-confi-dence), and if you would be giving upsomething else to perform this task.

Dr. Hamermesh puts it simply. Headvises that physicians should "use theirmoney incomes to have some tasks theydon't like done by others, unless doingthose tasks is so relaxing or enjoyablethat it's worth it for them to perform thetasks themselves."

He also comments, "I always thinkspending makes sense. I trust that peopleknow their own values and their costs oftime better than anyone else does, andthey are behaving in ways that are bestfor them."